A to Z of Market Research
"If we knew what we're doing, it wouldn’t be called research.” - Albert Einstein
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What Is Market Research?
Market research consists of systematically gathering data about people or companies – a market – and then analyzing it to better understand what that group of people needs. The results of market research, which are usually summarized in a report, are then used to help leaders make more informed decisions about the company’s strategies, operations, and potential customer base.
Understanding industry shifts, changing consumer needs and preferences, and legislative trends, among other things, can shape where a business chooses to focus its efforts and resources. That’s the value of market research.
Meaning, if your research told you that scientists had recently created a new kind of fabric that helped the wearer lose weight just by putting it on, for example, your retail clothing store might want to adjust its buying plan to test designs using this new fabric. Or if you uncovered that shoppers in your area rely heavily on coupons in making a purchase decision, you might decide to test sending your mailing list a promotional coupon.
Market research can help businesses run more efficiently and market more effectively.
Why is market research important?
Conducting research is one of the best ways of achieving customer satisfaction, reducing customer churn and elevating business. Here are the reasons why market research is important and should be considered in any business:
Valuable information: It provides information and opportunities about the value of existing and new products, thus, helping businesses plan and strategize accordingly.
Customer-centric: It helps to determine what the customers need and want. Marketing is customer-centric and understanding the customers and their needs will help businesses design products or services that best suit them. Remember that tracing your customer journey is a great way to gain valuable insights into your customers’ sentiments toward your brand.
Forecasts: By understanding the needs of customers, businesses can also forecast their production and sales. Market research also helps in determining optimum inventory stock.
Competitive advantage: To stay ahead of competitors market research is a vital tool to carry out comparative studies. Businesses can devise business strategies that can help them stay ahead of their competitors.
Types of Market Research
While there are a number of market research tools you can use, there are really only two types of market research data:
Primary. Primary data is first-hand information you gather yourself, or with the help of a market research firm. You control it.
Secondary. Secondary data is pre-existing public information, such as the data shared in magazines and newspapers, and government or industry reports. You can analyze the data in new ways, but the information is available to many people.
Using primary or secondary data, there are two types of research studies:
Exploratory. Exploratory market research gathers lots of open-ended data from many people to understand a problem or opportunity better. The goal is to gather perceptions and opinions regarding an issue, so your company can decide how to address it. But first, you have to understand how your market sees the issue.
Specific. Once you understand the larger market issues or opportunities, you can use specific questions to gather the information that could lead to a new product or service. Market research firms often use specific questions to gather feedback on a new advertising campaign, or to refine a planned new product.
Primary Market Research Tools
While primary research is more time-consuming and expensive, sometimes it’s the only way to get the information you need. The most common primary research tools are:
Surveys. Asking customers a series of questions to better understand how they feel about a product’s features, or about the experience, they had during their hotel stay, for example, are two possible uses of a survey. Surveys consist of a list of questions that can be shared with an individual by phone, in person, on a card or paper, or online using survey software.
Focus groups. Bringing together groups of people with a common characteristic, such as age, hobby, or buying habits, to better understand their likes and dislikes is a focus group. Focus groups typically consist of 8-12 people with a moderator who poses questions for the group to discuss. They are a useful way of getting feedback on a new product, new features, or new ad campaign.
Observation. When the researcher gathers information simply by watching how a subject interacts with a product, the technique is observation. This is often used in comparing preferences for several types of products.
In-depth interviews. Another market research technique is the one-on-one interview with an individual, during which probing questions are posed to better understand that person’s product preferences.
Sources of Secondary Data
When conducting market research to better understand industry trends and broader shifts, secondary research is often a good place to start. Some of the most useful sources include:
Industry associations and trade groups – most associations publish annual outlooks
Trade journals specific to your industry
Government reports - such as the Census or annual federal procurement results
Industry analysts – these individuals monitor the performance of public companies in your space
University faculty members – see what research reports they may have published
Websites – while Wikipedia isn’t a reliable source, there may be others that lead you to reputable sources and reports
Competitor websites and materials – to convince potential customers to buy from them, they may share useful statistics and reports
Benefits of an Efficient Market Research
Make well-informed decisions: The growth of an organization is dependent on the way decisions are made by the management. Using market research techniques, the management can make business decisions on the basis of obtained results that back their knowledge and experience. Market research helps to know market trends, hence to carry it out frequently to get to know the customers thoroughly.
Gain accurate information: Market research provides real and accurate information that will prepare the organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
Determine the market size: A researcher can evaluate the size of the market that must be covered in case of selling a product or service in order to make a profit.
Choose an appropriate sales system: Select a precise sales system according to what the market is asking for, and according to this, the product/service can be positioned in the market.
Learn about customer preferences: It helps to know how the preferences (and tastes) of the clients change so that the company can satisfy preferences, purchasing habits, and income levels. Researchers can determine the type of product that must be manufactured or sold based on the specific needs of consumers.
Gather details about customer perception about the brand: In addition to generating information, market research helps a researcher in understanding how the customers perceive the organization or brand.
Analyze customer communication methods: Market research serves as a guide for communication with current and potential clients.
Productive business investment: It is a great investment for any business, because thanks to it they get invaluable information, it shows researchers the way to follow to take the right path and achieve the sales that are required.
How to do market research: the steps
Now that we have reviewed the main types of market research and the most used techniques, let’s get to the heart of the matter and find out how to do market research, step by step.
Define buyer personas are fictitious, generalized representations of ideal customers. They are profiles that possess the distinctive characteristics (expected, desired) of the model client and report the possible recurring actions. Buyer personas attempt to create a daily narrative that strives to further understand consumers, the challenges they face, and the decision-making processes they employ to choose products and services.
Identify a group of personas to engage Once you have defined the key characteristics of buyers, this information should be used to identify the group of real people to whom you want to ask questions. If the selection has been done accurately, this group should constitute a representative sample of target customers.
Prepare questions for participants The next step is to prepare the questions in a way that maps out a clear, non-dispersive path. Make sure that you structure the interview in a sequence that will ensure a progressive depth of understanding, and that you manage your time so that you’re able to ask all of the important questions.
List your main competitors At this point, prepare a prospectus that lists and describes all major competitors. Identify the strengths and weaknesses, financial situation, reputation, etc. for each.
Summarize your findings Here, the objective is to develop a summary document where you can organize the results of the market research. The tool chosen should facilitate clear communication and sharing of the knowledge acquired with the rest of the team, Product managers, CMOs, executives from other departments, etc.
Tell a story Now, it’s a matter of structuring what our market research has highlighted into a form that is immediately understandable, comprehensive, and interesting. Holding the attention of stakeholders (for example, department heads or executives who have not followed the preparation of the market research but are interested in the results) is not a trivial matter. For this reason, one solution may be to translate the results into a story and build out their narrative dimension.
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